NASHVILLE, Tenn.--(EON: Enhanced Online News)--Lieff Cabraser partners Mark
Chalos and Annika
K. Martin, and Montgomery Ponder partners Luke
Montgomery and Brad
Ponder, have filed a class action lawsuit in Tennessee federal court
on behalf of Marietta McClendon of Nashville, Tennessee alleging that
North Carolina Mutual Life Insurance Company (NCM) cheated her family
and potentially thousands of other life insurance customers, often
minority individuals and families, for financial gain.

“It’s especially unfair to
cheat grieving families.”

The complaint alleges that NCM shorted Ms. McClendon’s family and other
beneficiaries of life insurance policies after the deaths of their loved
ones. NCM, according to the complaint, charged higher interest rates on
customers’ policy loans than originally promised and failed to credit
payments from customers on policy loans, making life insurance payouts
lower than the beneficiaries were entitled to receive. The lawsuit
applies to life insurance policies purchased through 2009 and alleges
breach of contract and violations of North Carolina’s Unfair or
Deceptive Trade Practices Act.

Nashville-area resident Marietta McClendon, the named Plaintiff, was the
beneficiary of a $10,000 life insurance policy originally bought by her
mother, Bessie Mae McDaniel, on behalf of her son (and Ms. McClendon’s
brother), Willie Charles McDaniel, Jr. Ms. McDaniel paid the premiums
faithfully. In 1995, Ms. McDaniel took out a policy loan against the
life insurance policy for approximately $1,500.

Ms. McDaniel continued to pay the premiums on that policy and on the
policy loan until her death in 2005. From then on, her son Willie
continued taking care of the policy, paying premiums and paying back
what was owed on the loan.

When Willie passed away in March 2016, NCM said they only owed the
family about half of the $10,000 face value of the policy. The family
investigated and discovered that NCM was attempting to short them money
that NCM owed. Despite the family asking for full payment, NCM has
failed to make it right.

Ms. McClendon said: “My mother and brother worked hard to protect our
family. Losing them was hard on our family. We expected the life
insurance company to stand behind their policy and to pay what they
owed. We want to hold the insurance company accountable and are fighting
to keep other families from being cheated.”

“Taking unfair advantage of families who bought life insurance is both
wrong and illegal,” said Lieff
Cabraser partner Mark Chalos. “The families deserve a square deal;
they never expected to get ripped off.”

“These families bought life insurance policies to provide their children
and other loved ones in their time of need,” Montgomery
Ponder partner Luke Montgomery, said. “It’s especially unfair to
cheat grieving families.”

In 2009, NCM assumed over 52,000 life insurance policies from Alabama
insurance companies Booker T. Washington Insurance Company, Inc.,
Protective Industrial Insurance Company, and Universal Life Insurance
Company. At the time of the assumption, the Alabama insurers were in
receivership proceedings.

A large number of the life insurance policies had modest face values,
around $10,000, and many policy holders were encouraged to take out
“policy loans” based on the value of the policies. As noted in the
complaint, these policy loans had specified interest rates in loan
documents, many of which are believed to have an interest rate of 5
percent. When NCM took over the policies, it allegedly did not apply the
interest rate promised in the loan documents to the policy loans.
Instead, NCM intentionally applied a 6 percent interest rate to all
policy loans, the complaint states. As a result, policyholders were
charged an interest rate higher than the agreed upon rate, again as
noted in the complaint.

In addition, payments made on the policy loans were pocketed by the
insurance companies and allegedly not applied properly to the loans. As
a result, when life insurance proceeds were eventually paid following
the death of a loved one, NCM did not pay the full amount owed to the
beneficiaries, according to the complaint.

Policyholders or beneficiaries of life insurance policies originally
sold by Booker T. Washington Insurance Company, Inc., Protective
Industrial Insurance Company, or Universal Life Insurance Company in
Alabama or elsewhere, who believe they have been cheated, are
urged to contact us about their experiences.

About Lieff Cabraser

Recognized as “one of the nation’s premier plaintiffs’ firms” by The
American Lawyer, Lieff
Cabraser Heimann & Bernstein, LLP is a seventy-attorney law firm
with offices in San Francisco, New York, Nashville, and Seattle. We are
committed to achieving justice for consumers, employees, patients,
investors, and business owners; promoting safer products and fair
competition; protecting our environment; assisting individuals blow the
whistle on fraud; safeguarding the rights of patent and copyright
holders; and remedying violations of the civil rights of citizens
worldwide.